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Principia Deploys Web Platform for Independent Valuation and Risk Surveillance of Investments and Derivatives

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Principia Partners, a provider of software for the management and administration of structured finance investments today launched a software as a service (SaaS) version of Principia SFP. The valuation, investment analysis and risk surveillance platform is now accessible as an integrated web-based service to manage vanilla and structured derivatives, as well fixed income and structured credit investments.

Swaps Financial Group, a leading US independent derivatives advisor was an early adopter of the solution. Peter Shapiro, managing director of Swaps Financial Group, said, “Principia allows us to perform the independent valuations, portfolio analysis and risk assessment needed to ensure our clients get the best pricing and terms from derivative dealers and the on-demand transparency to manage their portfolios. Its models were developed on the trading floor and are unique in their ability to capture and price nuances of certain complex swaps used by our institutional investor and major debt issuing clients. It’s also integral to the portfolio wide risk oversight and cash flow reports we provide.”

Derivative managers, brokers and advisors can access Principia SFP’s Portfolio and Risk Management modules to analyse and price derivative and fixed income transactions. For over 15 years the capital markets industry has implemented the software to independently price derivatives – from simple valuations on plain vanilla swaps, to complex hedge and scenario analyses of portfolios containing structured derivatives. Users now have instant online access to structure even the most complex transactions with embedded optionality, callable features and subtle tenor and basis spread adjustments. Market data is provided in the package and integrated with both industry standard and proprietary models to perform valuations and risk assessments.

Investment managers benefit from a single analytical environment to track and manage entire fixed income portfolios, including full support for structured finance assets, such as RMBS and ABS. The deal structure for any given deal can be modelled and performance and cash flow data integrated for detailed investment analysis and risk oversight. Current market prices and performance measures can be calculated, stored and retrieved for analysis on request. Portfolio managers can then project cash flows and stress test based on forecasting assumptions of default, prepayment or interest rates. Ongoing portfolio risk oversight reports then help to ensure portfolios are being managed diligently and within the parameters established by an organisation’s investment guidelines.

With the SaaS delivery model the power and breadth of Principia SFP is available on a low risk subscription basis, in an environment that dramatically improves time-to-market. Infrastructure management is outsourced to Principia and the barriers to implementation and maintenance costs associated with in house builds are eliminated.

“Increasingly, portfolio managers are expressing an interest in accessing our enterprise solution for independent pricing and risk management and sometimes the infrastructure, capital or time constraints associated with an installed solution are a barrier. We are excited to see so much interest in SaaS already. It delivers the highly tuned functionality for derivatives and structured finance that we are known for, but on a subscription basis without the maintenance overheads and lead times of an on premise implementation,” said Theresa Adams, president and CEO, Principia Partners.

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